Africa Bonds

The coronavirus pandemic means many parts of the US are experiencing an unusual festive period. But emerging markets sovereigns broke another Thanksgiving tradition by flooding primary bond markets with new deals on what is usually a quiet week for new issues — even as levels of stress are rising sharply at the riskier end of the asset class. Oliver West and Mariam Meskin report.

Rating: Ba3/B+

CEEMEA sovereign borrowers extended their last minute funding spree this week with Romania joining Ivory Coast in the primary bond market.

The Ivory Coast has sparked life into what has been a bleak year for sub-Saharan African bond issuance. Most sovereigns have turned to the official sector to support them throughout the coronavirus crisis as a result of being priced out of the international debt capital markets, bankers said.

South African pulp and paper company Sappi has tapped the equity-linked market for financing with a new five-year R1.8bn ($120m) convertible bond.

Zambia has become Africa’s first sovereign to default since the coronavirus started, after it failed to make payments on its Eurobonds. The heavily indebted country now faces a rocky path to debt restructuring, market sources said.

Egypt, which has already entered international debt markets twice this year, is on its way to debuting in the sukuk market following cabinet approval for an Islamic financing bill. The sovereign raised its debut syndicated loan in September that included an Islamic tranche, which bankers said was a fitting prelude to a sukuk.

Zambia is headed for a default next week, as GlobalCapital understands the bondholder committee responsible for 40% of the sovereign Eurobonds will reject the deferral request in a vote next week.

Corporate issuance volumes across CEEMEA have dropped this year, while sovereign issuance has sky-rocketed. The decline, said market participants, is testament to the resilience of the corporate sector, though a revival in issuance is expected in 2021.

Sovereigns have dominated bond issuance in the CEEMEA region this year. But rating agencies expect sovereign downgrades in 2021.

Two EM bond issuers beat hasty retreats from the primary market this week. But despite the challenges the pair faced, bankers and investors believe the market is open for borrowers looking to pick up a bit of funding ahead of what is expected to be a tortuous US election. Lewis McLellan reports.

First Bank of Nigeria became the first African bank to print a eurobond in 2020 on Tuesday, raising $350m despite a turbulent backdrop in Nigeria.